Data Highlights

• The labour market maintained its positive momentum, with employment showing consistent growth nationwide. In September 2024, employment increased by 1.9% YoY and 0.2% MoM, bringing the total workforce to 16.69mn individuals. The key drivers behind this sustained improvement in Malaysia’s labour market were the strengthening of the tourism sector and recovery in global trade. Furthermore, the stable economic outlook has bolstered the country’s resilient labour force, as indicated by the performance of Malaysia’s Leading Index (4.0% YoY).

• Particularly, the number of employed persons, which was concentrated in the Services sector, continued to record increases, particularly in Food & beverage services; Wholesale & retail trade, and Information & communication activities. On the same note, the Manufacturing, Construction, Mining & quarrying and Agriculture sectors also registered a rise in employment.

• Meantime, the number of unemployed individuals continued to decline, decreasing by 3.2% YoY to 555.3k individuals (Aug24: 558.5k persons), gradually approaching the pre-pandemic levels of 519k in 2019. On a monthly basis, the number of unemployed people decreased by 0.6%. During the month, the jobless rate held steady at 3.2%.

• The labour force (encompassing both employed and unemployed individuals) saw MoM expansion of 0.1% MoM or a YoY growth of 1.7% in September 2024, reaching a total of 17.2mn individuals. This growth suggests a healthy level of engagement in the labour market, with labour force participation rate at 70.5%.

• Meanwhile, the number of individuals outside the labour force remained relatively stable on an annual basis, where there was a minimal MoM decline of 0.02%, totaling 7.23mn persons. Among those outside the labour force, 42.9% cited housework and family responsibilities as their primary reason for not participating in the labour market, followed closely by schooling and training at 41.1%.

• Moving forward, we believe Malaysia’s labour market must remain agile and adaptable to global shifts that may be driven by a Trump presidency. By strategically leveraging growth opportunities— such as increased foreign direct investment and shifts in global supply chains—while proactively addressing risks in vulnerable sectors, Malaysia can bolster its economic resilience.

• Additionally, there may be potential for increased domestic growth through government efforts aimed at strengthening the labour market. Such initiatives could include targeted upskilling and reskilling programs to equip workers with in-demand skills, policies to promote job creation in high-value industries such as technology and green energy, and social safety nets to protect vulnerable groups during periods of economic adjustment. Government-backed infrastructure projects and incentives for businesses to expand domestically could further support employment growth and ensure a more inclusive recovery that benefits a broad spectrum of workers across different sectors. This combined approach would help mitigate external risks while driving sustainable growth from within.

• The labour market is set for further improvement, building on the momentum gained from the government’s efforts to foster job growth and economic stability. This year, the unemployment rate is expected to average 3.3%, with our projection of a decline to 3.2% by year-end already being on track. We believe this trend will be sustained. Based on this trajectory, it is likely that the jobless rate will average 3.2% in 2025, potentially reaching 3.1% by the end of the year.

Source: TA Research - 11 Nov 2024